'Gladiator' for $3.99: Intertainer.com plans to
expand to eight cities in April. It expects to reach the top 30 markets
by the end of the year.

For years, computer and cable TV prognosticators have talked
about a day when video stores would be obsolete, and we would access the latest
movie at the click of a mouse or remote control. Video on demand (VOD), they
said, would mean we'd no longer have to drive to the video store and accept
second or third choice when everything else was checked out. No more having
to remember to rewind the tape and get it back on time, either. Many Net surfers
may be surprised to discover that VOD has quietly become a reality.

Web site CinemaNow started streaming independent films both
for free and for a fee in November, and if you like old movies, Intertainer.com
offers classics such as 1963's Charade as well as episodes of the Beverly
Hillbillies TV show.

Sony Pictures Entertainment will launch a VOD movie service,
Moviefly, this spring. Others, including Disney and 20th Century Fox, are examining
the possibilities.

"We regard the Internet as a significant new medium," says
Sony Pictures vice president Don Levy. "And we see that consumers will increasingly
turn to the Net to access entertainment media."

Indeed, Motion Picture Association of American president
Jack Valenti hailed the recent court decision against song-swap service Napster
as a victory for all content owners, and said it would encourage studios to
put films online. Consumers will be offered "an exciting new, high quality and
legal opportunity to choose what they want to watch," he says.

VOD aims to replace the $1.5 billion pay-per-view cable
and satellite business, originally seen by Hollywood as a savior that would
one day premiere films. But PPV never took off as envisioned. Poor marketing,
slim selections and haphazard start times contributed to consumer indifference,
which is why so many are optimistic about VOD's future.

Recent post-video, pre-pay cable films are available via
VOD on both PC and cable TV, depending on where you live. Cable subscribers
in six cities, including Seattle, Tampa and Portland, Maine, can now get VOD
on their TV sets, through separate programs from Blockbuster Video and AOL Time
Warner's Road Runner high-speed service. And in Cincinnati, Intertainer is working
with DSL provider ZoomTown. Intertainer, which is owned by Microsoft, Sony and
NBC, among others, plans to expand to eight cities in April and to the top 30
markets by the end of the year.

Intertainer acknowledges its Intertainer.com site is just
an ad for the premium VOD service. Unlike Blockbuster and Road Runner, which
require a separate set-top box with your TV, high-speed subscribers of Intertainer
partners simply register and fill out a credit-card form to start watching such
films as Gladiator or Woody Allen's Small Time Crooks ($3.99 each).

Nationally, "we get 2,500 to 3,000 people a week sending
us e-mail saying, 'How can I get your service?' " says Terrence Coles, vice
president of content. "So we know there's an appetite for it."

Unlike PPV, with VOD films you can rewind, fast-forward
and pause, and movies start as soon as you pay for them. Most give you 24 hours
to watch, so you can stop viewing and resume later.

But on VOD, you won't find selection as broad as in a video
store. Blockbuster has deals only with MGM, Universal and independents, while
Road Runner has access to movies from sister company Warner Brothers and DreamWorks.
Intertainer has movies from DreamWorks, Warner Brothers, 20th Century Fox and
Columbia/TriStar.

Still, Blockbuster is hedging its bets by joining the fray.
It began a trial Dec. 15, which is scheduled to end shortly. Though Blockbuster
recently split from technology partner Enron, chief marketing officer Allen
Klose calls VOD "the Holy Grail of the home movie-watching experience 
what customers have been asking us for."

Blockbuster is starting with movies on TV because "that's
where the biggest numbers of people are," Klose says. Not everyone agrees: "It's
the PC today; in the future, there will be a new name for the entertainment
appliance," says Intertainer's Mark Sonnenberg. (Intertainer offers a free wireless
PC-to-TV device for die-hards who prefer old-fashioned viewing.)

Many have argued that people don't want to watch videos
on their PCs. But Sonnenberg disagrees. "This is marquee product. There's a
big difference between looking at somebody's bar mitzvah videos online and Gladiator."

While Sony's films must be downloaded, Blockbuster, Road
Runner, Intertainer and CinemaNow use streaming video. "Click the mouse, and
you're watching within seconds," Sonnenberg says. "True, the image quality is
better with a download, but we think most people would rather watch it right
away than wait a few hours."